Garmin reports second quarter revenue and earnings growth; raises guidance

Category:

Wednesday, August 2, 2017 6:00 am CDT

Dateline:

SCHAFFHAUSEN, Switzerland

Public Company Information:

NASDAQ:
GRMN
KYG372601099
"We delivered another quarter of revenue and earnings growth led by strong double-digit growth in our outdoor and aviation segments"

SCHAFFHAUSEN, Switzerland--(BUSINESS WIRE)--Garmin Ltd. (Nasdaq: GRMN) today announced results for the second quarter ended July 1, 2017.

Highlights for the second quarter 2017 include:

  • Total revenue of $817 million, growing 1% over the prior year, with outdoor, aviation, marine and fitness collectively growing 8% over the prior year quarter and contributing 74% of total revenue
  • Gross margin improved to 58.5% compared to 57.0% in the prior year quarter
  • Operating margin improved to 24.9% compared to 24.7% in the prior year quarter
  • Operating income was $203 million, growing 1% over the prior year quarter
  • GAAP EPS was $0.91 and pro forma EPS(1) was $0.88
  • Strong demand for the highly anticipated fēnix® 5 watch series led to significant growth in our outdoor segment
  • Launched the VIRB® 360, our first immersive 360-degree 5.7K/30 fps spherical camera
  • Our Connect IQ store has delivered 17 million downloads to our customers in the past year bringing the total number of downloads since inception to over 30 million
                         
(in thousands, 13-Weeks Ended 26-Weeks Ended
except per share data) July 1, June 25, Yr over Yr July 1, June 25, Yr over Yr
2017 2016 Change 2017 2016 Change
Net sales $816,885 $811,609 1 % $1,455,431 $1,435,648 1 %
Outdoor 194,776 133,096 46 % 310,652 229,923 35 %
Aviation 124,060 108,331 15 % 246,931 214,647 15 %
Marine 108,545 111,599 -3 % 212,990 194,479 10 %
Fitness 181,022 212,855 -15 % 318,852 355,273 -10 %
Auto 208,482 245,728 -15 % 366,006 441,326 -17 %
 
Gross margin % 58.5 % 57.0 % 58.4 % 55.9 %
 
Operating income % 24.9 % 24.7 % 22.0 % 21.2 %
 
GAAP diluted EPS $0.91 $0.85 7 % $2.17 $1.31 65 %
Pro forma diluted EPS (1) $0.88 $0.87 1 % $1.40 $1.36 3 %
(1) See attached table for reconciliation of non-GAAP measures including pro forma diluted EPS
 

Executive Overview from Cliff Pemble, President and Chief Executive Officer:

“We delivered another quarter of revenue and earnings growth led by strong double-digit growth in our outdoor and aviation segments,” said Cliff Pemble, president and chief executive officer of Garmin Ltd. “The demand for advanced wearables was particularly strong, but was partially offset by negative trends in the activity tracker market. Our results thus far give us confidence in raising our outlook for the remainder of the year.”

Outdoor:

During the second quarter of 2017, the outdoor segment grew 46% driven by strong demand for our fēnix® 5 watch series. Gross margin improved to 66% while operating margin improved to 38%, resulting in operating income growth of 53%. We launched the Approach® S60, our newest GPS golf watch with a sunlight-readable color touchscreen display, and recently announced new offerings in our Foretrex® and Rino® lineup. Looking forward, we are focused on growth opportunities in wearables and inReach product lines.

Aviation:

The aviation segment posted revenue growth of 15%, driven primarily by strong aftermarket sales and positive contributions from OEM product categories. Gross and operating margins were strong at 75% and 32%, respectively, resulting in 28% operating income growth. During the quarter, we announced our first Head-up Display (GHD) system for integrated flight decks and are pleased that it will be incorporated on the Cessna Citation Longitude coupled with the G5000® integrated flight deck. We also received approval from the European Aviation Safety Agency for our previously announced G1000® NXi system. Looking forward, we are focused on maximizing ADS-B mandate opportunities and gaining share in the OEM market.

Marine:

Revenue in the marine segment declined 3% during the quarter, with gross and operating margins of 57% and 22%, respectively. For the first half of the year we delivered 10% revenue growth and 9% operating income growth and remain confident in our outlook for the year. During the second quarter of 2017, we announced the acquisition of Active Corporation, a developer of crowd sourced content for boaters and launched our latest marine wearable, the quatix® 5, adding autopilot control and the ability to mark remote multifunction display waypoints. Looking forward, we are focused on product innovations and gaining share in the inland fishing category.

Fitness:

Revenue in the fitness segment declined 15% during the quarter, with gross and operating margins of 56% and 21%, respectively. The drop in revenue was primarily driven by a decline in the activity tracker category due to the general decline of the basic activity tracker market and the timing of product introductions. Looking forward, we are focused on growth opportunities in advanced wearables devices.

Auto:

The auto segment recorded revenue decline of 15% in the second quarter of 2017, primarily due to the ongoing PND market contraction partially offset by growth in niche categories such as fleet, camera and RV. Gross and operating margin declined year-over-year to 45% and 13%, respectively but increased sequentially. During the second quarter of 2017, we launched the VIRB® 360, a compact, multi-lens, full spherical 360-degree camera. The VIRB 360 offers an easy-to-use camera that captures video up to 5K/30fps with four built in microphones and easy upload. Looking forward, we are focused on disciplined execution to bring desired innovation to the market and to optimize profitability in the segment.

Additional Financial Information:

Total operating expenses in the quarter were $275 million, an increase of 5% over the prior year. Research and development increased 11% primarily due to engineering personnel costs related to our wearable product offerings and aviation. Selling, general and administrative expenses increased 2%, and were relatively flat as a percent of sales. Advertising decreased 5% primarily due to reduced media spending and lower cooperative advertising.

The effective tax rate in the second quarter of 2017 was 25.0%. The pro forma effective tax rate in the second quarter of 2017 was 21.9% (see attached table for reconciliation of this non-GAAP measure) compared to an effective tax rate of 21.0% in the prior year quarter. The year-over-year increase in the pro forma effective tax rate is primarily due to the Company’s election to align certain Switzerland corporate tax positions with evolving international tax initiatives partially offset by income mix by tax jurisdiction.

In the second quarter of 2017, we generated $129 million of free cash flow (see attached table for reconciliation of this non-GAAP measure). We continued to return cash to shareholders with our quarterly dividend of approximately $96 million and our share repurchases activity, which totaled approximately $36 million in the second quarter of 2017. We have approximately $11 million remaining in the share repurchase program authorized through December 31, 2017. We ended the quarter with cash and marketable securities of approximately $2.3 billion.

2017 Guidance:

Based on our performance in the first half of 2017, we are updating our full year guidance. We now anticipate revenue of approximately $3.04 billion driven primarily by higher expectations for our outdoor and aviation segments partially offset by lower expectations for the fitness segment. Our outlook for marine and auto is unchanged. We anticipate our full year pro forma EPS will be approximately $2.80 based on an improved gross margin of about 57.5%, operating margin of about 21% and a full year pro forma effective tax rate of about 22%.

       
2017 Guidance
Updated     Prior
Revenue ~$3.04 B ~$3.02 B
Operating Income ~$640 M ~$605 M
Operating Margin ~21% ~20%
Tax Rate (Pro Forma)(1) ~22% ~22%
EPS (Pro Forma)(1) ~$2.80 ~$2.65
(1) See attached table for reconciliation of non-GAAP measures including forward-looking pro forma tax rate and EPS
 
2017 Revenue Guidance

 

Updated     Prior
Outdoor 25% 10%
Aviation 10% 5%
Marine 10% 10%
Fitness -5% 5%
Auto -17% -17%
 

Webcast Information/Forward-Looking Statements:

The information for Garmin Ltd.’s earnings call is as follows:

     
When: Wednesday, August 2, 2017 at 10:30 a.m. Eastern
Where:

http://www.garmin.com/en-US/company/investors/events/

How: Simply log on to the web at the address above or call to listen in at 855-757-3897
 

An archive of the live webcast will be available until August 3, 2018 on the Garmin website at www.garmin.com. To access the replay, click on the Investor Relations link and select the Quarterly and Annual Earnings page.

This release includes projections and other forward-looking statements regarding Garmin Ltd. and its business that are commonly identified by words such as “would,” “may,” “expects,” “estimates,” “plans,” “intends,” “projects,” and other words or phrases with similar meanings. Any statements regarding the Company’s GAAP and pro forma estimated earnings, EPS, and effective tax rate, and the Company’s expected segment revenue growth rates, consolidated revenue, gross margins, operating margins, currency movements, expenses, pricing, new products to be introduced in 2017, statements relating to possible future dividends and the Company’s plans and objectives are forward-looking statements. The forward-looking events and circumstances discussed in this release may not occur and actual results could differ materially as a result of risk factors and uncertainties affecting Garmin, including, but not limited to, the risk factors that are described in the Annual Report on Form 10-K for the year ended December 31, 2016 filed by Garmin with the Securities and Exchange Commission (Commission file number 0-31983). A copy of Garmin’s 2016 Form 10-K can be downloaded from http://www.garmin.com/aboutGarmin/invRelations/finReports.html .

Garmin, the Garmin logo, the Garmin delta, fēnix, Approach, Rino, Foretrex, G1000, G5000, quatix, and VIRB are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S.; Garmin Elevate and QuickFit are trademarks of Garmin Ltd. or its subsidiaries. All other brands, product names, company names, trademarks and service marks are the properties of their respective owners. All rights reserved

 
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share information)
                 
13-Weeks Ended 26-Weeks Ended
July 1, June 25, July 1, June 25,
2017     2016 2017     2016
Net sales $816,885 $811,609 $1,455,431 $1,435,648
 
Cost of goods sold 339,027 348,651   605,450   632,840  
 
Gross profit 477,858 462,958 849,981 802,808
 
Advertising expense 42,009 44,252 73,533 76,485
Selling, general and administrative expense 105,251 103,677 207,303 199,287
Research and development expense 127,248 114,355   249,450   222,559  
Total operating expense 274,508 262,284   530,286   498,331  
 
Operating income 203,350 200,674 319,695 304,477
 
Other income (expense):
Interest income 9,281 8,455 17,724 15,883
Foreign currency gains (losses) 15,110 (5,743 ) (22,387 ) (10,582 )
Other income 314 415   715   1,570  
Total other income (expense) 24,705 3,127   (3,948 ) 6,871  
 
Income before income taxes 228,055 203,801 315,747 311,348
 
Income tax provision (benefit) 57,105 42,737   (93,015 ) 62,193  
 
Net income $170,950 $161,064   $408,762   $249,155  
 
Net income per share:
Basic $0.91 $0.85 $2.17 $1.32
Diluted $0.91 $0.85 $2.17 $1.31
 

Weighted average common shares outstanding:

Basic 187,757 188,892 187,974 189,195
Diluted 188,492 189,356 188,691 189,491
 
 
Garmin Ltd. And Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share information)
             
(Unaudited)    
July 1, December 31,
2017     2016
Assets
Current assets:
Cash and cash equivalents $859,560 $846,883
Marketable securities 248,904 266,952
Accounts receivable, net 514,942 527,062
Inventories, net 525,167 484,821
Deferred costs 49,603 47,395
Prepaid expenses and other current assets 106,758   89,903  
Total current assets 2,304,934 2,263,016
 
Property and equipment, net 517,290 482,878
 
Marketable securities 1,200,432 1,213,285
Restricted cash 117 113
Deferred income taxes 265,719 110,293
Noncurrent deferred costs 62,741 56,151
Intangible assets, net 309,318 305,002
Other assets 88,221   94,395  
Total assets $4,748,772   $4,525,133  
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $161,398 $172,404
Salaries and benefits payable 86,955 88,818
Accrued warranty costs 37,012 37,233
Accrued sales program costs 51,531 80,953
Deferred revenue 145,603 146,564
Accrued royalty costs 29,378 36,523
Accrued advertising expense 23,180 37,440
Other accrued expenses 95,626 70,469
Income taxes payable 10,961 16,163
Dividend payable 286,865   96,168  
Total current liabilities 928,509 782,735
 
Deferred income taxes 56,691 61,220
Noncurrent income taxes 131,887 121,174
Noncurrent deferred revenue 145,582 140,407
Other liabilities 1,656 1,594
 
Stockholders' equity:

Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 187,703 shares outstanding at July 1, 2017 and 188,565 shares outstanding at December 31, 2016

17,979 17,979
Additional paid-in capital 1,839,587 1,836,047
Treasury stock (496,342 ) (455,964 )
Retained earnings 2,083,076 2,056,702
Accumulated other comprehensive income (loss) 40,147   (36,761 )
Total stockholders' equity 3,484,447   3,418,003  
Total liabilities and stockholders' equity $4,748,772   $4,525,133  
 
 
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
 
      26-Weeks Ended
July 1,     June 25,
2017 2016
Operating activities:
Net income $408,762 $249,155

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 29,558 26,657
Amortization 13,273 14,852
(Gain) loss on sale or disposal of property and equipment (56 ) 64
Provision for doubtful accounts 351 1,548
Deferred income taxes (159,719 ) (6,074 )
Unrealized foreign currency loss 25,928 3,198
Provision for obsolete and slow moving inventories 11,072 15,892
Stock compensation expense 20,385 19,507
Realized loss (gain) on marketable securities 584 (188 )
Changes in operating assets and liabilities:
Accounts receivable 23,785 24,415
Inventories (34,621 ) (16,672 )
Other current and non-current assets (6,328 ) (865 )
Accounts payable (20,942 ) (32,291 )
Other current and non-current liabilities (48,162 ) (10,806 )
Deferred revenue 2,988 (13,066 )
Deferred costs (8,383 ) (6,089 )
Income taxes payable 5,352   10,135  
Net cash provided by operating activities 263,827 279,372
 
Investing activities:
Purchases of property and equipment (39,812 ) (28,614 )
Proceeds from sale of property and equipment 121 -
Purchase of intangible assets (6,336 ) (2,831 )
Purchase of marketable securities (243,880 ) (457,433 )
Redemption of marketable securities 278,719 466,526
Change in restricted cash - 2
Acquisitions, net of cash acquired (7,500 ) (62,137 )
Net cash used in investing activities (18,688 ) (84,487 )
 
Financing activities:
Dividends paid (191,691 ) (193,111 )
Purchase of treasury stock under share repurchase plan (63,957 ) (45,097 )
Purchase of treasury stock related to equity awards (3,582 ) (173 )
Proceeds from issuance of treasury stock related to equity awards 10,316 8,970
Tax benefit from issuance of equity awards -   2  
Net cash used in financing activities (248,914 ) (229,409 )
 
Effect of exchange rate changes on cash and cash equivalents 16,452 2,918
   
Net increase (decrease) in cash and cash equivalents 12,677 (31,606 )
Cash and cash equivalents at beginning of period 846,883   833,070  
Cash and cash equivalents at end of period $859,560   $801,464  
 
 
Garmin Ltd. And Subsidiaries

Net Sales, Gross Profit, and Operating Income by Segment (Unaudited)

(In thousands)

 
      Reportable Segments
                   

Outdoor

Fitness

Marine

Auto

Aviation

Total

 
13-Weeks Ended July 1, 2017
 
Net sales $194,776 $181,022 $108,545

$208,482

$124,060 $816,885
Gross profit $127,813 $102,139 $62,368 $93,037 $92,501 $477,858
Operating income $74,284 $37,487 $24,295 $27,926 $39,358 $203,350

 

 

 

 

 

 

13-Weeks Ended June 25, 2016

 

 

 

 

 

 

 
Net sales $133,096 $212,855 $111,599 $245,728 $108,331 $811,609
Gross profit $85,224 $119,805 $64,515 $112,988 $80,426 $462,958
Operating income $48,565 $53,074 $28,548 $39,623 $30,864 $200,674

 

 

 

 

 

 

26-Weeks Ended July 1, 2017

 

 

 

 

 

 

 
Net sales $310,652 $318,852 $212,990 $366,006 $246,931 $1,455,431
Gross profit $201,282 $179,879 $122,116 $162,970 $183,734 $849,981
Operating income $108,735 $55,959 $42,440 $34,595 $77,966 $319,695
 
26-Weeks Ended June 25, 2016
 
Net sales $229,923 $355,273 $194,479 $441,326 $214,647 $1,435,648
Gross profit $144,155 $192,100 $108,664 $199,131 $158,758 $802,808
Operating income $76,450 $69,647 $38,840 $58,190 $61,350 $304,477
 
 
Garmin Ltd. And Subsidiaries
Net Sales by Geography (Unaudited)
(In thousands)
 
    13-Weeks Ended     26-Weeks Ended
July 1,     June 25,     Yr over Yr July 1,     June 25,     Yr over Yr
2017 2016 Change 2017 2016 Change
Net sales $816,885 $811,609 1 % $1,455,431 $1,435,648 1 %
Americas 388,092 407,017 -5 % 708,281 724,974 -2 %
EMEA 315,039 309,721 2 % 541,834 535,448 1 %
APAC 113,754 94,871 20 % 205,316 175,226 17 %
EMEA - Europe, Middle East and Africa; APAC - Asia Pacific and Australian Continent
 

Non-GAAP Financial Information

To supplement our financial results presented in accordance with GAAP, this release includes the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: pro forma net income (earnings) per share, forward-looking pro forma earnings per share, pro forma effective tax rate, forward-looking pro forma effective tax rate and free cash flow. These non-GAAP measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP measures used by other companies. Management believes providing investors with an operating view consistent with how it manages the Company provides enhanced transparency into the operating results of the Company.

Pro forma effective tax rate

The Company’s income tax expense is periodically impacted by discrete tax items that are not reflective of income tax expense incurred as a result of current period earnings. Therefore, the effective tax rate and income tax provision before the effect of such discrete tax items are important measures to permit consistent comparison between periods. In fiscal 2016, there were no such discrete tax items identified.

 
Garmin Ltd. And Subsidiaries
Pro Forma Effective Tax Rate
(in thousands, except effective tax rate (ETR) information)
                 
13-Weeks Ended 26-Weeks Ended
July 1, July 1,
2017 2017
 
$ ETR (1) $ ETR (1)
U.S. GAAP income tax provision (benefit) $57,105 25.0 % ($93,015 ) (29.5 %)
Pro forma discrete tax items:
Revaluation of deferred tax asset(2) - 168,755
Tax expense from share-based award expirations(3) (7,275 ) (7,275 )
Total pro forma discrete tax items (7,275 )       161,480        
Income tax provision (Pro Forma) $49,830       21.9 % $68,465       21.7 %
(1) Effective tax rate is calculated by taking the Income tax provision (benefit) divided by Income before taxes, as presented on the face of the Condensed Consolidated Statements of Income.
 

(2) In first quarter 2017, a $169 million tax benefit was recognized resulting from the revaluation of certain Switzerland deferred tax assets. The revaluation is due to the Company’s election in February 2017 to align certain Switzerland corporate tax positions with international tax initiatives. As this revaluation is not reflective of income tax expense incurred related to the current period earnings, and therefore affects period-to-period comparability, it has been identified as a pro forma adjustment.

 

(3) Following adoption in fiscal 2017 of Accounting Standards Update No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), the Company may periodically incur tax expense resulting from stock options and stock appreciation rights (SARs) expiring unexercised. New grants of stock options and SARs no longer comprise a significant component of the Company’s compensation arrangements. As the tax expense from expired awards is not related to current period earnings or compensation activities, and affects period-to-period comparability, it has been identified as a pro forma adjustment.

 

The net release of uncertain tax position reserves, amounting to approximately $2.9 million and $4.9 million in the first half of 2017 and 2016, respectively, have not been included as pro forma adjustments in the above presentation of pro forma income tax provision as such amounts tend to be more recurring in nature.

Pro forma net income (earnings) per share

Management believes that net income (earnings) per share before the impact of foreign currency gains or losses and certain discrete income tax items, as discussed above, is an important measure in order to permit a consistent comparison of the Company’s performance between periods.

 
Garmin Ltd. And Subsidiaries
Pro Forma Net Income (Earnings) Per Share
(in thousands, except per share information)
                 
13-Weeks Ended 26-Weeks Ended
July 1, June 25, July 1, June 25,
2017     2016 2017     2016
 
Net income (GAAP) $170,950 $161,064 $408,762 $249,155
Foreign currency gains / losses(1) (15,110 ) 5,743 22,387 10,582
Tax effect of foreign currency gains / losses(2) 3,302 (1,204 ) (4,855 ) (2,114 )
Discrete tax items(3) 7,275       -   (161,480 )     -  
Net income (Pro Forma) $166,417       $165,603   $264,814       $257,623  
 
Net income per share (GAAP):
Basic $0.91 $0.85 $2.17 $1.32
Diluted $0.91 $0.85 $2.17 $1.31
 
Net income per share (Pro Forma):
Basic $0.89 $0.88 $1.41 $1.36
Diluted $0.88 $0.87 $1.40 $1.36
 
Weighted average common shares outstanding:
Basic 187,757 188,892 187,974 189,195
Diluted 188,492 189,356 188,691 189,491
(1) The majority of the Company’s consolidated foreign currency gains and losses are typically driven by movements in the Taiwan Dollar, Euro, and British Pound Sterling in relation to the U.S. Dollar and the related exchange rate impact on the significant cash, receivables, and payables held in a currency other than the functional currency at one of the Company’s subsidiaries. However, there is minimal cash impact from such foreign currency gains and losses.
 
(2) The tax effect of foreign currency gains and losses was calculated using the pro forma effective tax rate of 21.9% and 21.7% for the quarter and year-to-date ended July 1, 2017, respectively, and an effective tax rate of 21.0% and 20.0% for the quarter and year-to-date ended June 25, 2016, respectively.
 
(3) The discrete tax items are discussed in the pro forma effective tax rate section.
 

Free cash flow

Management believes that free cash flow is an important financial measure because it represents the amount of cash provided by operations that is available for investing and defines it as operating cash flow less capital expenditures for property and equipment.

 
Garmin Ltd. And Subsidiaries
Free Cash Flow
(in thousands)
                 
13-Weeks Ended 26-Weeks Ended
July 1, June 25, July 1, June 25,
2017     2016 2017     2016
 
Net cash provided by operating activities $143,432 $149,985 $263,827 $279,372
Less: purchases of property and equipment (14,275 )     (14,706 ) (39,812 )     (28,614 )
Free Cash Flow $129,157       $135,279   $224,015       $250,758  
 

Forward-looking pro forma effective tax rate

Forward-looking pro forma effective tax rate and forward-looking pro forma net income (earnings) per share are calculated before the effect of certain discrete tax items. Management believes certain discrete tax items may not be reflective of income tax expense incurred as a result of current period earnings. Therefore, in order to permit consistent comparison between periods, the effective tax rate and earnings per share before the effect of such discrete tax items are important measures. In fiscal 2017, management believes certain discrete tax items recognized on a GAAP-basis have an effect on comparability between periods:

  • The fiscal 2017 pro forma effective tax rate excludes certain tax effects from share-based compensation as a result of ASU 2016-09. The Company is unable to reasonably estimate these amounts on a forward-looking basis due to the dependency of this item on the underlying share price of the Company. The fiscal 2017 pro forma effective tax rate excludes the $7.3 million tax expense resulting from the expiration of share-based awards as discussed in the pro forma effective tax rate section above. The impact of this discrete tax item was $0.04 per share for the first half of 2017.
  • The fiscal 2017 pro forma effective tax rate excludes the $168.8 million income tax benefit resulting from the revaluation of certain Switzerland deferred tax assets as discussed in the pro forma effective tax rate section above. The impact of this discrete tax item was ($0.90) per share for the first half of 2017.

While management expects the above to have a significant impact on comparability, management is unable to determine whether or not additional significant discrete tax items will be identified in the second half of 2017.

Forward-looking pro forma earnings per share (EPS)

In addition to the discrete tax items discussed in the forward-looking pro forma effective tax rate section above, our 2017 pro forma EPS excludes foreign currency exchange gains and losses. The estimated impact of such foreign currency gains and losses cannot be reasonably estimated on a forward-looking basis due to the high variability and low visibility with respect to non-operating foreign currency exchange gains and losses and the related tax effects of such gains and losses. The impact of such foreign currency gains and losses, net of tax effects, was $17.5 million, or $0.09 per share for the first half of 2017.

Contact:

Garmin Ltd.
Investor Relations Contact:
Teri Seck, 913-397-8200
investor.relations@garmin.com
or
Media Relations Contact:
Ted Gartner, 913-397-8200
media.relations@garmin.com

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